Some small and medium enterprises have dragged the government to court over levying cesses on firms exempted from customs duty even as the revenue department scrambles to boost tax collections. These SMEs have filed a writ petition in the Gujarat High Court, challenging applicability of cesses including education cess, higher secondary education cess and social welfare surcharge on exporters exempted from paying any customs duty on their imports under Merchandise Exports from India Scheme (MEIS).
While there is no clarity on whether cesses are applicable to beneficiaries of MEIS, in most cases cess are levied over and above an existing tax, people familiar with the matter said. In their writ petition, SMEs have argued that if they are exempted from customs duty, the question of cess applicability doesn’t arise. The high court on Wednesday allowed the matter to be heard and granted interim relief to SMEs.